Thursday, June 28, 2007

In the UK the "popular" media is now touching on the rather "odd" weather that the UK has experienced so far this year. Hottest April on record (where were the April showers) and now the wettest June on record with floods causing billions of pounds worth of damage and 4 deaths (and counting).

Is it all the fault of the dreaded "climate change"? Here is just a selection of "weather related" stories from today's PlanetArk news round-up.

LONDON - Monsoon summers, with short but heavy downpours, are predicted by scientists to become a feature of British weather, bringing floods that could cause around one billion pounds worth of extra damage a year.

The flash flooding that has affected Sheffield and Hull in particular this week, as well as a large swathe of land across the north of England and the Midlands, is a growing phenomenon and follows floods in Carlisle in 2005 and Boscastle in 2004.

The Environment Agency expects the risks of flooding to rise significantly during this century.

Climate change is being blamed, as well as poor maintenance of the flood prevention system and dabbling in nature, such as concreting over the countryside which acts as a natural drainage system and trying to re-route rivers.

ATHENS - A heatwave that has killed more than 30 people in parts of southeast Europe has hit wildlife and crops, from the humble toad in Greek lagoons to grain across the region, while fruit is ripening weeks early in Italy.

Greece is experiencing its worst heatwave in 110 years that has already killed seven people, with temperatures reaching 46 Celsius (114.8 Fahrenheit) during a scorcher that has lasted five days and showed no signs on Wednesday of letting up.

In southern Italy, after the hottest spring in nearly two centuries, this year's harvest of grapes and other fruit and vegetables is expected to be as much as a month earlier than usual, at the beginning of August.

BEIJING - Drought in China's northeast, the country's top corn and soybean region, is likely to last for another week at least and could seriously undermine grains production, agricultural officials said on Wednesday.

The province of Jilin, the country's top corn producer, has received almost no rain for more than two months, an official in the Jilin agricultural department said.

"We got no rain since crops were planted in mid-April. High temperatures, particularly in June, have worsened the situation. If it continues, crops will be damaged," the official said.

JOHANNESBURG - A rare winter snowstorm dusted South Africa's commercial capital Johannesburg early on Wednesday as a winter weather front moved across the country, closing mountain passes and claiming at least one life.

"SNOWBURG" trumpeted the headline of Johannesburg's Star newspaper.

To end this "weather" round-up we finish on a cheery note that desertification is a threat to global security. It never rains, it pours.

OSLO - Desertification could drive tens of millions of people from their homes, mainly in sub-Saharan Africa and central Asia, a UN study warned on Thursday.

People displaced by desertification put new strains on natural resources and on other societies nearby and threaten international instability, the 46-page study by the UN University showed.

"There is a chain reaction. It leads to social turmoil," Zafaar Adeel, the study's lead author and head of the UN University's International Network on Water, Environment and Health, said.

The study urged governments to work out ways to slow the advance of deserts, from the Sahara to the Gobi, caused by factors such as climate change and land over-use. Better plantings of crops and forests in nearby drylands were simple measures to help.

"Desertification has emerged as an environmental crisis of global proportions, currently affecting an estimated 100 to 200 million people, and threatening the lives and livelihoods of a much larger number," the study said.

We develop two public choice models in which environmental regulation is determined endogenously in the presence of agents who are heterogenous in wealth or income. In the first model, regulation is determined by a majority vote, and an increase in inequality induces an increase in environmental standard. In the second model, the environmental standard is chosen by a corrupt bureaucrat. In that model, while the impact of an increase in inequality on the environmental standard is uncertain, a higher level of corruption always reduces the quality of environmental regulation. An empirical analysis using cross-country data confirms the implication of both models. Keywords: Environmental regulation, corruption, inequality JEL: Q56 Q58

In this blog post it is useful to highlight his conclusion which is a neat summary of teh link between economics and climate change (and hence the issues that this blog aims to encompass).

Stern on climate change now that he is back in Academia:

"It is a subject that's so important and so interesting, you've got everything in there, even the ethics, the economicsiof risk,all sorts of industrial economics, detailed public economics of what you do in a perfect economy, you've got game theory, expansion of trade and development, everything, finanical structures, there's hardly any part of economics that's not there. It is absolutely fascinating, so I will stay involved with that".

We of course agree and is one of the motivations for maintaining this environmental economics blog.

China has overtaken the United States as the world's biggest producer of carbon dioxide, the chief greenhouse gas, figures released today show.

The surprising announcement will increase anxiety about China's growing role in driving man-made global warming and will pile pressure onto world politicians to agree a new global agreement on climate change that includes the booming Chinese economy. China's emissions had not been expected to overtake those from the US, formerly the world's biggest polluter, for several years, although some reports predicted it could happen as early as next year.

But according to the Netherlands Environmental Assessment Agency, soaring demand for coal to generate electricity and a surge in cement production have helped to push China's recorded emissions for 2006 beyond those from the US already. It says China produced 6,200m tonnes of CO2 last year, compared with 5,800m tonnes from the US. Britain produced about 600m tonnes.

Jos Olivier, a senior scientist at the government agency who compiled the figures, said: "There will still be some uncertainty about the exact numbers, but this is the best and most up to date estimate available. China relies very heavily on coal and all of the recent trends show their emissions going up very quickly." China's emissions were 2% below those of the US in 2005. Per head of population, China's pollution remains relatively low - about a quarter of that in the US and half that of the UK.

The new figures only include carbon dioxide emissions from fossil fuel burning and cement production. They do not include sources of other greenhouse gases, such as methane from agriculture and nitrous oxide from industrial processes. And they exclude other sources of carbon dioxide, such as from the aviation and shipping industries, as well as from deforestation, gas flaring and underground coal fires.

China vowed to "blaze a new path to industrialisation" today as it unveiled its first national plan on climate change.

But in a blow to efforts to tackle global warming, the world's second biggest producer of greenhouse gases refused to accept binding targets for emissions, saying wealthy developed nations must take the bulk of the responsibility for the problem.

The announcement of the 62-page action plan appeared aimed at deflecting criticism ahead of the G8 plus six summit in Germany this week and a series of key international meetings on the environment.

BEIJING - An environmental monitoring station in southern China is recruiting people with keen noses to sniff out foul gases in the atmosphere and provide more accurate readings of air quality.

A team of 11 "professional noses" at a monitoring station in Panyu, an industrial town in the Pearl River delta in Gaungdong province, had been trained by air pollution experts, Wednesday's China Daily quoted a senior official at the station as saying.

"China's 2006 carbon dioxide emissions surpassed those of the United States by 8 percent," the Netherlands Environmental Assessment Agency said in a statement. In 2005, it said China's emissions were 2 percent below those of the United States.

"With this, China tops the list of CO2 emitting countries for the first time," it said. Almost all scientists say rising amounts of carbon dioxide will bring more droughts, floods, desertification, heatwaves, disease and rising seas.

Here is a collection of recent news on China's environmental situation. The first three are rather depressing, but the last two show some hopeful signs for the country. You know, you could have your hands filled 24/7 with a blog that covered environmental issues in China alone.

The final point is one we agree with and why we currently have two PhD students working on this topic.

International Political Economy Zone (IPEZone) has now been added to the blogroll. It is an excellent blog that also originates from the University of Birmingham. This is still one of the best blog by-lines:

Although not strictly environmental (although it is agricultural) here is an interesting paper on the relationship between illicit drug prices and increasing globalisation.

The link between the price of drugs and the economic forces of supply and demand is a fascinating subject. One might expect enforcement and the technological ability of governments to stop drug smuggling to result in a price increase over time. So why have prices continued to fall? I am sure globalisation plays a large role and is investigated in the paper below (the Afghan conflict has certainly not helped raise the heroin price as supply has dramatically increased recently).

------------------------

"Globalization and the Price Decline of Illicit Drugs" CESifo Working Paper Series No. 1990

ABSTRACT: Retail prices of major drugs like cocaine and heroin have declined dramatically during the last two decades. This price decline has tended to offset the effects of drug policies aimed at reducing drug use in major industrial countries. The main finding of this paper is that the decline in the retail prices of drugs is related to the strong decline in the intermediation margin (the difference between the retail and producer prices) in the drug business. We develop the hypothesis, and give some evidence, that globalization has been an important factor behind the decline of the intermediation margin. We conclude with some thoughts about the effects of globalization on the effectiveness of drug policies and argue that globalization may have increased the relative effectiveness of policies aiming at reducing the demand of drugs.

Tuesday, June 19, 2007

When we think about the negative impact of globalization on the environment we think of two main mechanisms - growth in developing countries leading to environmental degradation (think China) and secondly, the widespread migration of dirty industry from the north to the south in pursuit of lower costs.

The issue of offshoring is therefore of interest. When the US or EU "offshores" production what are the economic implications? This overview piece from IPZone provides a good summary and draws on articles from Business Week and BEA (Bureau of Economic Analysis).

I too have gripes about BEA data, but all the same, I have serious conceptual problems with these "new economy"-type arguments that offshoring/outsourcing/globalization have rendered national statistical data collection as we know it obsolete. Still, it's food for thought and presents ammunition for the globalization-is-evil crowd whose numbers are legion.

Monday, June 18, 2007

Although the conclusion that coal and carbon emissions are linked this paper provides an interesting decomposition methodology. My interest comes primarily from the suggestion that Chinese statistics have been overstated or are inaccurate and would explain a number of results in some current work I am involved in.

A number of previous studies on China's carbon emissions have mainly focused on two facts: 1) the continuous growth in emissions up till the middle of the 1990s; 2) the recent stability of emissions from 1996 to 2001. Decomposition analysis has been widely used to explore the driving forces behind these phenomena. However, since 2002, China's carbon emissions have resumed their growth at an even greater rate. This paper investigates China's carbon emissions during 1971-2003, with particular focus on the role of biomass, and, the fall and resurgence in emissions since the mid-1990s. We use an extended Kaya identity and the well-established logarithmic mean Divisia index (LMDI I) method. Carbon emissions are decomposed into effects of various driving forces. We find that: (1) A shift from biomass to commercial energy increases carbon emissions by a magnitude comparable to that of the increase in emissions due to population growth; (2) The technological effect and scale effect due to per capita GDP growth are different in the pre-reform period versus the post-reform period; (3) The positive effect of population growth has been decreasing over the entire period; (4) The fall in emissions in the late 1990s and resurgence in the early 2000s may be overstated due to inaccurate statistics. The rapid growth since the early 2000s, therefore, may not indicate a "new trend"; (5) Carbon emissions exhibit a correlation of 0.99 with coal consumption, which points to explicit policy suggestions. JEL: Q43 Q25

Thursday, June 14, 2007

A good opportunity for economics post-docs. FEEM is an excellent European research centre covering the broad environmental economics subject area.

Dear Colleague,We would like to inform you that the Fondazione Eni Enrico Mattei (FEEM) looks forward to hosting researchers from the EU, the Associated Countries or the Third Countries within the Marie Curie Individual Fellowships scheme.

These Fellowships are awarded by the European Commission within the FP7 PEOPLE programme for a period between 1 and 2 years. They are addressed to experienced researchers, typically with PhD degree or four years research experience(full-time equivalent), since obtaining a university degree giving access to doctoral studies.Candidates must be Non-Italian researchers and must not have resided or carried out their main activity in Italy for more than 12 months in the 3 years immediately prior to the reference deadline for submission.

A recently published study of cod stocks off Canada and New England shows that the cod stocks grew and declined at about the same time, revealing that environmental factors played a stronger role in the collapse of the cod fishery than previously thought.

In an article in the latest Transactions of the American Fisheries Society, Dr. Brian Rothschild of the University of Massachusetts Dartmouth argues that an interruption in the food chain, possibly caused by climate change, was a key factor in the cod's disappearance.

"These environmental changes were probably as important in influencing declines in cod abundance as the effects of fishing," said Rothschild. "The standing stock biomass and weight-at-age statistics for various stocks tend to follow the same pattern. However, when fishing is superimposed on top of an unfavorable environment, it appears to accelerate the negative effects of the environment in bringing about a decline."

Since colonial times, cod has been the mainstay of New England and Canadian Maritime fishing fleets. The collapse of cod fisheries in the northwest Atlantic in the early 1990s hit both the industry and fishing towns hard, but the cod population still hasn't recovered despite radically reduced fishing.

The cod's decline has been an intriguing scientific mystery filled with dozens of sometimes apparently conflicting clues. First came the cod population declines of the 1970s. This was followed by a strong upswing in the 1980s and then the steep decline beginning in the mid-1980s when fishing pressure was low. Another clue was that cod were not only waning in numbers but were experiencing significant decreases in growth rate. Meanwhile, scientists painstakingly worked to tease apart the various stocks of cod, only to find that the extent to which the stocks mingle is still its own mystery and has unknown effects on the population as a whole. Finally, changing water temperatures seemed to be associated with salinity decreases and changing cod diets.

In his study, Dr. Rothschild assembles the various pieces of this puzzle into a coherent picture to answer the question of what happened to the cod. Since the abundance of various stocks from southern Newfoundland all the way to the Gulf of Maine rose and fell at the same time, cod stocks must have been responding to environmental factors operating over a wide area, Rothschild contends. The dramatically reduced slower growth of cod and their changing stomach contents support the concept that the supply of plankton may have been disrupted, hence affecting the availability of cod forage like capelin and herring that feed on plankton.

These observations have important implications for fishery management. All of the "rules" used in fishery management-production, yield-per-recruit, and stock-and-recruitment-relate to the effects of fishing and ignore the effects of the environment. The known strong influence of the environment on stock abundance suggests reevaluating definitions and remedies for over-fishing. In particular, Rothschild says, rebuilding stocks in a mandated, specific period of time may not be feasible.

These observations are also critically important to the fishing industry. The industry needs to know whether decreases or increases in stock abundance are the result of fishing or environmental change. Causes associated with fishing suggest modifying the intensity of fishing, but causes associated with multi-annual environmental variability suggest longer term strategies that might involve changing target species or investment strategies.

Of greatest concern to the industry are questions related to longer term changes. Rothschild said scientists need to fully explore whether climate change is affecting the North Atlantic Ocean ecosystem.

"I think the most important point is that a decline in the cod populations was inevitable, and fishing simply aggravated it," said noted fisheries biologist Ray Hilborn, the Richard C. and Lois M. Worthington Professor of Fisheries Management at the University of Washington." Fishing pressure should have been reduced sooner on the Canadian stocks, but they were going to decline regardless. The decline of the Gulf of St. Lawrence stocks in particular began at a time of high abundance and low fishing pressure."

Future research will focus separating the influence of fishing from the influence of the ocean environment on changes in fish stocks.

Transactions of the American Fisheries Society is a bimonthly journal of the American Fisheries Society now in its 136th year of continuous publication. Abstracts can be searched online for free at http://afs.allenpress.com. The American Fisheries Society is a professional scientific organization of almost 10,000 fisheries biologists and managers from around the world. Its mission is to improve the conservation and sustainability of fishery resources and aquatic ecosystems by advancing fisheries and aquatic science and promoting the development of fisheries professionals.Coherence of Cod Stock Dynamics in the Northwest Atlantic, by Brian J. Rothschild of the School for Marine Science and Technology, University of Massachusetts Dartmouth, New Bedford, Massachusetts. Transactions of the American Fisheries Society 136:858-874. Rothschild can be contacted at 508/910-6382 or brothschild@umassd.edu.

-- Clear-cutting old growth timber increases the likelihood of landslides by speeding erosion; as large trees' root structures bind soil to underlying bedrock.

-- Forests foliage canopy dissipates rainfall over large areas and vegetation soaks up rainfall, so the risk of floods is raised when dense forests are cleared.

SOIL NUTRIENT DEPLETION AND DESERTIFICATION:

-- Deforestation-exacerbated wind and water erosion of soil depletes it of vital mineral nutrients like nitrogen and phosphorus, making soil less fertile and less able to sustain agricultural production, and speeds desertification.

OXYGEN PRODUCTION:

-- Sucking in carbon dioxide and sending out oxygen through photosynthesis, the world's largest tropical rainforest in Brazil's Amazon contributes an estimated 20 percent of global oxygen production.

-- As different plants put out differing amounts of oxygen, some scientists say it is misleading to call forests "the lungs of the Earth", as some are oxygen neutral, and sea plants like plankton and algae are more significant oxygen producers.

BIODIVERSITY/HABITAT

-- Around two thirds of the world's estimated five to 30 million animal and plant species live in forests.

-- An estimated 60 million people inhabit forests and depend on them for their livelihoods, according to Global Forest Watch.

-- Species threatened by forest loss include the great apes (orangutan, gorillas, chimpanzees and bonobos,) tiger, Asian rhino, and elephant, the World Wide Fund for Nature (WWF) says.

DOES REPLANTING HELP?:

-- Rehabilitated and/or secondary forests can never fully replace original rainforest's multi-storied mix of trees and millions of organisms, some of which are only now being discovered.

Sources: Global Forest Watch (www.globalforestwatch.org/english/about/faqs.htm), The United Nations Environment Programme (www.unep.org/billiontreecampaign/FactsFigures/QandA/index.asp) The Center for International Forestry Research (CIFOR), (www.cifor.cgiar.org), World Wide Fund for Nature, Species Habitat Loss (www.panda.org/about_wwf/what_we_do/species/problems/habitat_los s_degradation/index.cfm)

Any respectable Environmental Economics course will have a section of Forestry. The standard approach is to look at the single rotation model and then progress onto the infinite rotation model and the Faustmann rule (Faustmann's formula gives the land value, or the forest value of land with trees, under deterministic assumptions regarding future stand growth and prices, over an infinite horizon).

In the associated classes it is always useful to bring in some real world examples - this is a case where things appear to be going horribly wrong - are we back to property rights or something more sinister? The economics behind the existence of a vibrant black market in wood and illegal logging are problems political economists need to address.

This is perhaps the most telling of many interesting points raised in this article (talking about Indonesia):

Like the United Nations, it blames a well-organised, shadowy network of multinational firms it says are increasingly targeting its parks as one of the few remaining sources of commercial timber supplies.

But tracks between the towering tropical hardwood trees open up into car park-sized clearings littered with logs as long as buses.

Forestry officers say the reserve is under attack from unscrupulous commercial loggers who work outside authorised zones and do not respect size limits in their quest for maximum financial returns.

"I lack words to describe what is going on here," says Richard Greine, head of the local forestry post, 350 km (220 miles) north of Cameroon's capital Yaounde.

"Both illegal and authorised exploiters have staged a hold-up on the forest."

From central Africa to the Amazon basin and Indonesia's islands, the world's great forests are being lost at an annual rate of at least 13 million hectares (32 million acres) -- an area the size of Greece or Nicaragua.

The timber business is worth billions of dollars annually, and experts say few industries that size are as murky as the black market in wood.

Evidence of rampant deforestation around the globe points in one direction: booming demand in China, where economic growth is fuelling a timber feeding frenzy.

In just the past decade, China has grown from importing wood products for domestic use to become the world's leading exporter of furniture, plywood and flooring.

Chinese firms might not be chopping down the trees themselves, but their insatiable appetite is driving up prices, spurring loggers to open more tracks like those torn through Ngambe-Tikar and drawing huge global investment to the companies.

COLONIAL RELICS

In Mande village on the fringe of the Cameroon jungle, Pierre, a hunter dressed in tattered shorts and T-shirt, does not know that more than half his country's original forest cover has been cut down in his lifetime.

But he knows the local eco-system has been ravaged.

Once upon a time, wild animals would sometimes stroll right into his compound. "These days you don't see any. They don't fall into our traps anymore. You need to go very far, deep in the forest to see or catch one," he tells Reuters.

As usual, it is the poorest who pay.

In nearby Democratic Republic of Congo, the lure of timber wealth has seen loggers accused of cheating villagers with deals activists say are a "shameful relic of colonial times".

A two-year investigation by Greenpeace accused companies, mostly from Germany, Portugal, Belgium, Singapore and the United States, of illegally acquiring titles to about 15 million hectares (37 million acres) of Congolese rainforest after a 2002 moratorium.

In return for small gifts such as farm tools, bags of salt and cases of beer, the firms won logging rights worth hundreds of thousands of dollars, the probe found.

The biggest target of the loggers is Afromosia, or African teak, which can sell for hundreds of dollars a cubic metre.

Locals in one village, Lamoko, Greenpeace says, gave away thousands of hectares for presents worth only about US$20,000.

Depressingly similar accusations mar the logging industry in Brazil, home to most of the Amazon basin -- the planet's largest remaining tropical rainforest.

FOREIGN MERCENARIES

About a fifth of Brazil's Amazon has already been destroyed, and Chinese demand for commodities such as iron ore, bauxite and especially soy, has been a big factor in pushing the country's agricultural frontier further north.

Most illegal logging is done by Brazilians, either poor migrants from the dry northeast or cattle ranchers and soy farmers coming in from the south.

The government has long been criticised for deforestation and has a very public policy of stopping illegal clearing and slowing clearing rates overall. But the frontier area is very remote, and police are underfunded, disorganised and often corrupt.

Spinning the globe further west, the problem is perhaps even more acute in Indonesia.

Without drastic action, the United Nations says, 98 percent of its remaining forests will be gone by 2022, with dire consequences for local people and wildlife, including endangered rhinos, tigers and orangutans.

In parts of Borneo and Sumatra, for instance, scientists are still finding new species of animals and plants but fear these could be lost to science before being studied fully.

Jakarta says illegal tree felling is ravaging 37 of its 41 national parks, and now accounts for about three-quarters of all logging in Indonesia.

Like the United Nations, it blames a well-organised, shadowy network of multinational firms it says are increasingly targeting its parks as one of the few remaining sources of commercial timber supplies.

The government has deployed soldiers at least three times in recent years to confiscate wood and chase out loggers, and is training quick response ranger teams to police protected areas.

But experts say the new units are crippled by lack of funds, vehicles, weapons and equipment, and face a huge threat from loggers who are often guarded by heavily armed militia led by foreign mercenaries.

"At this rate, by 2012 the forests in Sumatra, Borneo and Sulawesi will be gone, only the forests in Papua will be left," local environmental campaigner Rully Sumada tells Reuters. "And if cutting of trees continues, no forest will be left by 2022."

BARCODES AND PYGMIES

The plight of forests is a focus of a June 3-15 United Nations meeting in The Hague that gathers signatories of a global pact to save threatened species.

The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) already includes Latin America's bigleaf mahogany and Southeast Asia's ramin and agarwood trees in Appendix II, which requires strict trade controls to protect them.

Ramin, for instance, is sought after to make picture frames, pool cues, parquet flooring and decorative mouldings.

But Brazilwood, used to produce violin bows, was the only tree species to win tighter protection at the UN meeting in the Hague. Bids to curb logging of South and Central American cedar and rosewood trees, the source of some of the world's most valuable timber, failed after objections by several countries.

Many poor nations want the rich world to extend the Kyoto Protocol, the main UN plan for fighting global warming, to give farmers credits for letting forests stand rather than sell trees to loggers or clear land for crops.

Trees soak up carbon dioxide as they grow and release it when they rot or are burnt.

The United States and the European Union -- the second and third biggest markets for Indonesian timber after China -- have both agreed in principle to ensure Indonesian forest product imports are verified as legal.

But experts say the amount of investment in the logging companies from the industrialised world vastly outstrips donor efforts to help Jakarta.

Trying to cut into the loggers' vast illicit profits, activists are fighting back with campaigns to persuade Western consumers to ask questions about where their wood comes from.

The Geneva-based Tropical Forest Trust (TFT), a charity set up in 1999, has launched a programme in Indonesia under which a tree destined for felling is given a unique barcode.

"The international wood business is so full of traders and middlemen operating in a world of bribes, corruption and illegal practices that, unfortunately, we encourage buyers to assume everyone is guilty until proven otherwise," Poynton says.

He sees China as a major problem, sucking up illegal timber from all over the world and re-exporting it.

TFT also works in central Africa, where it has issued the latest computer technology to illiterate pygmy communities desperate to save their forest homes in the Republic of Congo, across the jungle border from Cameroon's Ngambe-Tikar.

Using touch screens on specially designed handheld global positioning system (GPS) units, the villagers mark the location of everything from sacred trees to crucial water sources and ancestral graveyards. The data is compiled and the timber companies are supposed to work around the important areas.

ANYTHING "AT A PRICE"

And TFT is working in China helping factories eliminate illegal supplies by identifying where their wood comes from.

While much of the world's illegal logging is driven by China's hunger for wood, few of the teak floorboards and ebony tables rolling out of its sawmills and factories end up in its own booming, smog-shrouded cities.

Despite rising incomes, few people can afford them. Instead, most of the valuable logs are exported as solid wood furniture, boards, or just veneer on cheaper products.

Centuries of domestic demand have slashed China's own forests, and demand for foreign supplies soared after Beijing tried to halt logging in remaining pockets in the 1990s after massive runoff from denuded slopes contributed to deadly floods along the Yangtze River.

But China's leaders appear to have little concern about exporting those problems to immediate neighbours or countries further away.

Under the glare of the international spotlight, they say they have clamped down on illegal imports from poor neighbour Myanmar.

But in the Nu river valley which runs along much of that frontier, piles of trunks over a metre thick are stacked by the valley mouth of most cross-border roads and loaded trunks trundle south.

In the regional hub of Mangshi, a trader surrounded by stacks of cheaper Chinese wood says he has no teak to hand but can order anything from across the border "at a price".

"If you know what you want, I have contacts in Myanmar who can get it within a couple of days," he tells a customer. (Additional reporting by Daniel Wallis in Nairobi, Emma Graham-Harrison in Beijing, Mita Valina Liem in Jakarta and Andrea Welsh in Sau Paulo)

Thursday, June 07, 2007

A couple of links to news articles covering the G8 climate change deal. I must admit to being a little surprised at how the US has moved on this issue. I suspect that this is merely a strategic move ahead of the "+5" joining the talks later this week.

Bush cannot not afford to give China anything - I am also surprised by the level of anti-China rhetoric coming out of the US along the lines of "China is stealing all our jobs".

There is still much for free trade economists to do in the US irrespective of environmental economic concerns.

[Blair said] "I'm both surprised and very pleased at how far we have come forward in the couple of years since [the 2005 G8 summit at] Gleneagles," he told reporters.

"Now we have an agreement that there will be a climate change deal, it will involve everyone, including the US and China, and it will involve substantial cuts."

It is interesting to read the BBC article after reading this commentary written on the 5th June by Walden Bello at Foreign Policy in Focus with the by-line (a think tank without walls). This is a good read.

In this article Walden comments on a leaked draft of the G8 declaration.

A close look at a leaked draft of the G8 declaration reveals that the Merkel-Bush quarrel concerns details not substance. The guiding principle of the document’s approach to climate change is to “decouple economic growth from energy use.” In other words, economic growth remains central and sacrosanct, meaning that the G8 will not likely propose any cuts in consumption levels. For instance, instead of calling for a radical cutback in automobile use, the declaration accepts as given that the number of motor vehicles will double to 1.2 billion by 2020. It proposes to expand production and accelerate development of non-fossil fuel alternatives for future cars such as synthetic biofuels and carbon dioxide-free hydrogen.

The article continues and has some good comments to make about the wider issues of globalisation and environmental issues and how they are irrevocably tied.

Promoting Investment and TRIPsThe other parts of the declaration are even worse.

Curiously enough, the declaration begins with a long warning to developing countries that “erecting barriers” to foreign investment flows will “result in a loss of prosperity.” According to the document, “freedom of investment is a crucial pillar of economic growth, prosperity, and employment.” The G8 is signaling to China, Brazil, India, and the other dynamic developing economies that their investment regimes need to be more hospitable to western investors.

Continuing in this vein, the second part of the document is also addressed to developing countries. Innovation, it says, is central to economic growth, and it can only continue to play this role if there is “strong protection and enforcement of intellectual property rights.” The writing bears the fingerprints of the northern pharmaceutical industry and the high-tech lobbies. Here the G8 is warning Thailand, India, Brazil, and African countries to stop using methods like compulsory licensing to enable their populations to gain access to cheap drugs to fight HIV-AIDs and other pandemics, and telling China and the Southeast Asian countries to restrict the diffusion of advanced technologies through tighter enforcement of corporate intellectual property claims.

Targeting China, Recycling AfricaThere is, interestingly, a section entitled “Responsibility for Raw Materials: Transparency and Sustainable Growth.” The G8, the document states, seek “to support resource rich countries in their efforts to further expand their resource potentials while promoting sustainable development, human rights, and good governance.” Why is the G8 suddenly concerned with “increased transparency’’ in the extractive sector when their corporations have so long opposed efforts to control their depredations in the developing world? The answer is transparent in their “call on our trading partners to refrain from restraints on trade and distortion of competition in contravention of WTO rules and to observe market economy principles.” China, which has been concluding scores of mineral extraction agreements in Africa, Latin America, and Southeast Asia, is undoubtedly the main target of this section. The document reflects the fear among many rich country governments and corporations that the Chinese might end up shutting them out of resource-rich areas.

As for the G8 Declaration on Africa, it is mainly a recycling of old, unfulfilled promises to increase development aid, along with the usual platitudes about promoting good governance and more effective public financial management, institutionalizing “market-friendly” development frameworks, and “improving our response to fragile states.” At the Gleneagles summit in 2005, The Financial Times notes that, “the G8 committed itself to increasing overall annual aid levels by $50 billion by 2010 and doubling aid to Africa. Official figures show almost all these countries are behind their targets.”

I usually don’t agree with the Times editorial page. But this time it is hard to dispute its conclusion: “Nobody expects much from this increasingly outmoded talking shop of the complacent rich.” I couldn’t have said it better.

Today I received an email from tree-nation who aim to plant 8 million trees in the shape of a heart in the middle of the desert in Niger.

A laudable aim and a fairly neat website to go with it with an aim of creating an "interactive community".

To make money they are effectively selling trees from between 10 and 75 Euros per tree.

I am all for these "good news" stories but more often than not they fail after the founders get bored, move on or run out of money.

It will be interesting to track the growth of the "heart". It strikes me the the forces of nature and other logistical issues mean that this is by no means an easy project to sustain.

The final cheap shot is of course that planting 8 million trees will have a very small climate change effect. The question then is whether this time, money and effort could be better spent elsewhere (ignoring the profit motive effect).

I will them luck and will keep an interested academic eye on progress and may even buy an impressive looking Baobab tree on behalf of "Globalization and the Environment" blog if the ad revenues ever reach 75 Euros.

There is no doubt that today, World Environment Day, June 5th, 2007, we are sitting in a strange new ‘twilight zone’ in comparison to this day one year ago. Some of us are astonished at the progress we’ve made in this last year. Environmentalism has hit the big time - it’s going mainstream.

-- It is a pact agreed by governments at a 1997 UN conference in Kyoto, Japan, to reduce greenhouse gases emitted by developed countries to at least 5 percent below 1990 levels by 2008-12. A total of 173 nations have ratified the pact.

* IS IT THE FIRST AGREEMENT OF ITS KIND?

-- Governments agreed to tackle climate change at an "Earth Summit" in Rio de Janeiro in 1992 with non-binding targets. Kyoto is the follow-up and is the first binding global agreement to cut greenhouse gases.

* SO IT IS LEGALLY BINDING?

-- Kyoto has legal force from Feb. 16, 2005. It represents 61.6 percent of developed nations' total emissions. The United States, the world's biggest source of emissions, came out against the pact in 2001, reckoning it would be too expensive and wrongly omits developing nations from a first round of targets to 2012.

* HOW WILL IT BE ENFORCED?

-- Countries overshooting their targets in 2012 will have to make both the promised cuts and 30 percent more in a second period from 2013.

* DO ALL COUNTRIES HAVE TO CUT EMISSIONS BY FIVE PERCENT?

-- No, only 35 relatively developed countries have agreed to targets for 2008-12 under a principle that richer countries are most to blame. They range from an 8 percent cut for the European Union from 1990 levels to a 10 percent rise for Iceland.

* WHAT ARE THESE 'GREENHOUSE GASES?'

-- Greenhouse gases trap heat in the earth's atmosphere. The main culprit is carbon dioxide, produced largely from burning fossil fuel. The protocol also covers methane, much of which comes from agriculture, and nitrous oxide, mostly from fertiliser use. Three industrial gases are also included.

* HOW WILL COUNTRIES COMPLY?

-- The European Union set up a market in January 2005 under which about 12,000 factories and power stations are given carbon dioxide quotas. If they overshoot they can buy extra allowances in the market or pay a financial penalty; if they undershoot they can sell them.

* WHAT OTHER MECHANISMS ARE THERE?

-- Developed countries can earn credits to offset against their targets by funding clean technologies, such as solar power, in poorer countries. They can also have joint investments in former Soviet bloc nations.

Monday, June 04, 2007

Press release from the Economist dated 31st May. An interesting piece and useful to contrast the view that "business caused climate change and can also solve it" with the previous article on China.

As White House unveils climate strategy, The Economist argues that, given incentives, business can solve climate change

As the White House unveiled a long-term strategy on climate change Thursday, The Economist unveiled a special report on the subject that will appear in tomorrow's issue. Written by Deputy Editor Emma Duncan, the report argues that business’s conversion to combatting climate change is real and substantial. It is bringing forth serious investment in the technologies needed to produce clean energy. That is a big change, and a reason for optimism. However, the investment is not yet on a scale large enough to avert climate change.

But, The Economist notes, the world cannot expect business to combat climate change by itself. It needs the right incentives. Consumers won’t provide them: governments must. They have to make polluters pay for the damage caused by the carbon dioxide they produce. And they have to do so globally—which is why next month’s G8 summit is so crucial to this issue.

It can be done. The technologies are available. And the costs of bringing them to market and thus stabilising greenhouse gas concentrations at a safe level look reasonable. Doing so would probably mean cutting global growth by 0.1% a year. Given the risks, it’s worth it.

Duncan concludes, “Business caused the problem of climate change, and business can solve it. But it can do so only if governments put the right incentives in place. This is up to the politicians, and the people who vote them into power.”

In a timely release ahead of the G8 summit, China today launched its "first plan on climate change".

This is an interesting follow up to the previous post and as can be seen, climate change is one thing but growth and poverty reduction are still far more important to developing countries especially in China where political sensitivities are still playing out.

The BBC headline says it all "China puts economy before climate". How anyone could have expected any different would be more of a surprise.

"The first and overriding priorities of developing countries are sustainable development and poverty eradication," says the Chinese plan.

What China does recognise however is that it is likely to suffer some of the greatest costs from climate change. That should be incentive enough for them to act swiftly.

Indeed, China is good at setting targets:

They are a strong declaration of intentions, but so far China has missed almost every environmental target it has set itself, our correspondent says.

The sheer scale of Chinese growth and the reliance of coal means that it is unlikely that CO2 emissions will be stabilise for another 20 years or so. The economic reasoning for this is sound. In my opinion this puts greater emphasis on the West to cut their emissions to offset the growth in China's.

An indication that China is more than aware of the impact of climate change can be seen here.

China Says Impact of Climate Change Clearer Daily

BEIJING - The impact of global warming on China is clearer each day, but climate change must be tackled in a way that allows sustainable development, a top-level meeting chaired by Premier Wen Jiabao agreed.

The world's number two emitter of greenhouse gasses will release its first national plan to curb rising emissions next week, seeking to rebut international criticism that it is not doing enough on the issue.

Officials in China's State Council, or cabinet, called at their meeting for countries to bear "shared but different" responsibilities to combat rising temperatures, a report posted on the main government Web site (www.gov.cn) on Friday said.

The comments were in line with Beijing's stance that China should not have to sacrifice the emissions-intensive economic growth which industrialised nations went through on their path to greater prosperity.

It says China's low per capita emissions levels, and rich countries' responsibility for most of the global warming gasses in the atmosphere, mean the West should take stronger action to cut its own pollution.

However the cabinet agreed climate change had a direct impact on the country's fundamental interests, and China attached great importance to tackling it, the report said.

"Every region and government department should fully recognise the importance and urgency of combating climate change," it added.

China looks set to become the world's top emitter of carbon dioxide this year or next, just as serious talks start to extend the UN-sponsored Kyoto Protocol on global warming beyond 2012.

Next week President Hu Jintao attends a meeting of Group of Eight leaders in Germany at which global warming will be high on the agenda.

But Chinese officials have already reaffirmed Beijing's rejection of compulsory caps on emissions of carbon dioxide and other greenhouse gases that scientists say are heating the planet.

Sunday, June 03, 2007

The desire of often quite disparate groups to come together to protest at G8 summits is becoming traditional even if "trade" and hence "globalisation" is not even on the agenda.

Throwing together the environmental and anti-poverty groups is one thing. Add some anarchists and old school communists and you get some rather odd bedfellows.

Perhaps this explains the contrast in the two photographs below.

Colourful and cheery environmental protesters?

Not so cheery and looking altogether rather glum set of protesters.

It would be useful if all the protesters at these meetings could (1) take an elementary economics course and (2) read Martin Wolf's book Why Globalization Works

I am sure we will return to this subject as it is important to get to the bottom of the "globalization and the environment" debate.

Are the environmental protesters anti-growth?Are the environmental protesters anti-poverty?Are the environmental protesters anti-technological progress?Are all multi-nationals bad for the envrionment?Is trade bad for the environment?

With China now a fully fledged member of the WTO aristocracy traditional tariff barriers are harder to get through - there has been a long history of countries finding more ingenious methods of protecting national industries. This article provides some good examples of how China is frustrating world trade - it is interesting to note that they are using "environmental health" as a reason in some cases (my bold).

There is one thing that I cannot get my "environmental" head around. So China seizes 118 tonnes of Evian bottled water on health grounds. Fine. The reaction of Groupe Danone - not in the least concerned and will ship all the water back to France.

So in the first instance 118 tonnes of water are transported to China (at an environmental cost) and then shipped all the way back again at another environmental cost. Is it only me? This is just water we are talking about - that falls out of the sky even if it is then filtered through a rock or two? Something about this story is wrong.

May 30 (Bloomberg) -- Groupe Danone, the world's biggest yogurt maker, said Chinese officials seized about 118 tons of its Evian mineral water for breaching local safety rules.

The water, which arrived in China in February, failed quality inspections by Shanghai customs officials for having excessive amounts of bacteria, the Paris-based company said in an e-mailed statement today. The water is being kept in a warehouse and will be shipped back to France, it said.

Danone joins Yum! Brands Inc.'s KFC chain and retailers such as Procter & Gamble Co. and Wal-Mart Stores Inc. among international consumer goods companies to have fallen foul of Chinese health regulators in the past two years. China is also facing food scandals from domestic producers.

``It's not in the interest of the Chinese authorities to appear hostile towards international companies,'' said Jean-Marie L'Home, an analyst at Aurel-Leven SA in Paris who has a ``buy'' recommendation on the stock. ``This is a small problem that could have a short-term impact on the shares.''

China's government applies a bacteria standard ``different from that set by the World Health Organization,'' the company said in the statement. ``We need to reassure consumers that the microbial flora existing in our products is totally safe.''

Alpine Town

Evian, marketed as natural spring water, is named after the alpine town of Evian-les-Bains on Lake Geneva, according to Danone's Web site. The water filters through mineral-rich glacial sand formations and clay to the spring, where it is bottled.

Worldwide sales of Evian exceed 500 million euros ($672 million) a year, according to Danone.

``The Chinese criteria are not the same as those of the World Health Organization,'' said Danone spokesman Laurent Sacchi in a telephone interview in Paris. `` It will not affect our sales figures. This happens regularly to importers in China.''

Procter & Gamble, the largest U.S. consumer-products maker, in September halted sales of Japanese-made SK-II cosmetics in China after a health regulator said they contained dangerous and banned substances.

KFC suspended sales of a vegetable soup in China after allegations that it may contain harmful ingredients, the state- owned China Daily said in November 2005, citing the Food Safety Experts Committee in Guangdong. In March 2005, the company halted the sale of some items after it found they were tainted with Sudan 1, a dye that's been linked to cancer.

Wal-Mart, the world's largest retailer, removed some brands of children's clothing from its outlets across China after they were found to contain a cancer-causing dye in May last year.

`Banana SARS'

Food and consumer-product scandals in China have multiplied in recent months, with tainted pet food in the U.S. and poisonous toothpaste and drugs in Latin America linked to Chinese producers. Hundreds of pig deaths in southern China and an outbreak of avian influenza in Hunan province have fueled consumer fear.

The government last week quashed rumors that the nation's bananas contain a virus similar to the one that causes severe acute respiratory syndrome, or SARS, amid mounting public paranoia over food and consumer safety.

Domestic mobile phone users received text messages about a ``SARS-like'' virus infecting bananas, according to a statement on the Ministry of Agriculture Web site, which urged consumers not to believe or spread the story.

Danone this month started legal proceedings against Chinese partner Hangzhou Wahaha Group, claiming the company sold products from their five joint ventures illegally via other companies and refused to sell those competing businesses to its French partner.

Last week Danone requested a board meeting with Wahaha ``as soon as possible'' to discuss sales targets for the ventures.

``Danone will always find solutions in China,'' Aurel- Leven's L'Home said. ``Right now it is more important for Danone to settle its dispute with Wahaha.''

To contact the reporter on this story: Tian Ying in Beijing on ytian@bloomberg.net Ladka Bauerova in Paris at lbauerova@bloomberg.net .

About me

This blog is written by Professor Rob Elliott, an academic economist, with an interest in all things international and environmental..I am currently a Professor of International and Environmental Economics at the University of Birmingham..Find me at my homepage.

This weeks read

Following the recent workshop on the "Economics of the Stern Review" and the fuss caused by the "great global warming swindle" this book represents an excellent introduction to the topic. Chapter 6 is the chapter it all hinges upon.